Product Launch and My Pre-Launch Checklist

Posted on December 1, 2010 by Charlie B

I am preparing to launch a new web service in the next few weeks. I don’t have an exact date yet, but I have been putting together my pre-launch checklist of things to do, as well as a detailed launch plan. When looking for resources about the best way to launch a software business, I found many useful articles, but not very many consolidated resources which laid everything out in an easy to digest manner. I wanted to document the entire process to help structure my own thinking, as well as giving those who come after a roadmap to follow. After I launch, I will be reporting on the success of each segment of my plan.

Background Reading

First, there are several useful resources out there already, which had a lot of useful tips. They give some great insight into some of the strategies I am considering for getting good PR on the day of launch.
Product Launch Promotion by Marshalk
Balsamiq preparing for launch
How not to get PR from top sites (Video)
How Jason pitched to TechCrunch

There are many more, and each of those contain some great links as well, but I find myself repeatedly returning to these articles to re-read them to glean some additional wisdom from their words.

Optimize the site for the media

After reading the above links, I put together a media kit with logos and screen shots, and included a pre-launch FAQ for the media answering some common questions. I also updated my about page to be less generic, and to tell a more interesting story. I’ll come back and update this with links to those pages once my site is live. (*UPDATE 2/23* Site is now live)

Find a compelling story

In business, the best way to engage people is by telling a good story. I spent some time thinking about my unique compelling story, and then wrote about it – on my company about page. This story will become an important part of my media pitch as I launch, and will help make my company interesting and unique, even though my product is not consumer focused.

I restricted my story to a small paragraph, relatable in 5-10 sentences. I asked myself these questions to get a good feel for my own story, even though it isn‘t finalized:

  • Why should <insert target audience> care about my business?
  • How does my product or service substantially differ from the competition?
  • If a customer was in love with my product, how would they describe it to their friends?
  • What is my over-arching vision to make the world a better place with this business?
  • What personal challenges did I have to face in starting this business?
  • What was my breakthrough or ah-ha moment?

I’m working on a few versions for different audiences, and not everything applies every time I write such a story. I find wrapping up a few answers in a concise and clear narrative helps me convey my vision, and structure my thinking around what is truly important. I think Jason covered this well recently in his article on startup marketing ideas.

Finalize the site and product

Just before launching, at least a week after all final development fixes and design tweaks, I need to complete a final once over of the site (I have fewer then 10 final tweaks and bug fixes). Currently on my list:

  • Install proper SSL certificate
  • Run through all user test cases
  • Re-check the design in all the major browsers (Firefox, Chrome, Safari, IE6-8, Opera)
  • Complete a final security audit
  • Send out a survey to the dedicated test users (even if they are only family and friends!) and include a few new users who haven’t seen the product yet.
  • Install Analytics
  • Setup RSS feeds for mentions of my site, or target keywords on blogs, twitter, and other social sites.

Segmenting the marketing channels

I don‘t want to just submit to a variety of startup sites, but also sites which my customers actually read, or other places where I might have a unique value proposition. Thinking like this, my target “markets” are news sites as well as other sites which might link to me or talk about me. I segmented this large group into various areas where the audience might find something interesting about my site or business model, even if they were not potential customers. For my site, I brainstormed the following segments:

  • Startup sites – sites that cover new website launches
  • Small business sites – sites for tools for small business (my target market)
  • Design sites – sites which cover well designed websites (My site was designed by a professional designer)
  • Security sites – sites which cover internet security (My product is an internet security product)
  • Atlanta business news sites – My business is based in Atlanta
  • Cloud based sites – My site is a cloud SaaS service
  • Drupal related sites – My site is based on Drupal and utilizes multiple Drupal modules

Once I segmented this into a few categories, I started looking for places to submit my site. For startups, there are already some good lists. I found about 75 to look through using this list of startup related sites and this list of where to submit your startup. I couldn’t use every site on the list (not every one was a good fit) but it is a good starting place.

To find blogs and sites for other niches, I used technorati for blogs , google for the various target markets, and competitor link profiles where we met the same criteria (using Yahoo site explorer)

I plan to build a list of about 100 outlets, more than half related to sites my target customers are likely to read. I am expecting a response rate, with a compelling pitch, of about 10%-25%, which leaves me hoping for 10-25 write ups. The criteria I use to evaluate whether to pitch to a site is how highly relevant my product would be to their readers or users. I generally spend at least 20 minutes browsing the site, reading articles, and making sure I have something to add to their content before adding the site to my list. This is time consuming, but I think it will improve my response rate and the quality of any traffic generated from any press I might receive, as well as prevent wasting my time or the editors time.

Refining the pitch

Each market segment I defined will need its own unique compelling story, and each site submission will need a unique pitch customized to the site/person I am responding to.

I am writing one compelling story for each market segment I listed. For instance, my compelling story to a design focused site will be very different from the story I tell a security focused site. I judge a pitch highly when it doesn’t sound generic or fake, but is something I would like to receive myself. I want to be honest, vulnerable, and open with the publications, to set up a potentially long term relationship rather than a quick win.

My final pitch is not yet complete, but I will be sure to post a few samples after launch, along with my success rates.

As a way to quality check myself, I created a high level outline of what each pitch should contain.

  1. A personalized sentence or two, related to the specific site I am submitting to. If they have related material, how my site adds to the overall conversation or context of the market
  2. 5-10 sentence compelling story of why my product is great for their audience
  3. Link to my homepage
  4. Offer for interview or other details in the future
  5. Contact details

What am I missing?

Am I missing anything? Are there good resources I should read before finalizing my launch plan? If you have good ideas, post them in the comments and I will happily link to anything I end up using in my planning.

Update in 2012: I am now running an affiliate program for my startup. If you’re looking to make some extra cash, I pay 20% of all my sales. I would recommend new startups also look at affiliate programs. I don’t have a good ROI number yet, but I will add updates as more information comes in. Additionally, I have also started Crosswords Puzzle Maker, the easiest way to make awesome crossword puzzles online.

Posted in Startup Challenges | Tagged , , , , | 14 Comments

Updated Posting Schedule – What’s the Best Day to Post a Blog?

Posted on November 26, 2010 by Charlie B

Normally, I schedule my posts to come out on Friday mornings, EST. Lately, I have been wondering if this is really the best time to post new material – when I look at my stats, I generally see most visits coming during the week, and beginning to drop off on Friday and staying lowest over the weekend. Even new posts don’t seem to bump the numbers too much.

As a result, I started doing some research into the best times to post new articles. I haven’t found a definitive and satisfactory answer. For instance, one post claims Tuesday and Wednesday are the best times to post, while another claims the weekend is the best time to post.

The second post is better – it contains some data and details of it’s methodology. However, I remain unconvinced. First, most of my readers don’t share me on facebook, and second, my own stats point to midweek as the high time for traffic. Personally, I also tend to read fewer posts over the weekend, as I try to focus on relaxing more and working less those days.

As a result, I have decided to start posting on Wednesday Morning around 9AM EST instead of Friday Mornings. Generally, I start thinking about posts a couple weeks in advance. Then I write them on Monday or Tuesday, and refine them the remainder of the week. I’ll have to revise my schedule, and either plan to do some writing over the weekends, or start writing earlier. Either way, if I see an improvement based on the changed posting schedule, I’ll be sure to share the results.

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How to Get Stuff Done by Setting Aside Time

Posted on November 19, 2010 by Charlie B

I was recently in a discussion on the business of software forums where a user was asking for advice on how to complete the project he had set out for himself. He was having trouble finding time to focus on his product with the demands of daily life. His predicament reminded me of a story I once heard which motivated me to focus on work, and shows how time blocking can work as a strategy to achieve your goals.

A woman with a family of four was working as a consultant, and wanted to bring her career to the next level, but wasn’t sure how. After doing some research, she thought that the best way to advance her consulting business was to literally write the book in her specialized topic, then use that as a sales driver with customers. Her biggest obstacle was finding the time – Her daily work typically kept her busy from 8 in the morning until 6 at night. Her two young children needed time and care in the afternoon, and she wanted to spend time with her husband. Looking over her schedule, she decided that the best time to write the book would be after the rest of the family had gone to bed for the night, but she was still energetic enough to work. She blocked off 2 hours every day, from 10PM until midnight, to write. This allowed her to commit to 4 hours with her family and to maintain her normal work schedule. She set a goal of completing the book in one year, and set about writing it. At the end of the year, she had a fully formed and polished book, and was shopping it around to publishers. She used this inspirational story of the book creation process in her pitch to publishers and the marketing of the book (which, coincidentally, is how I heard about it). One year after deciding to write a book, she had a book published in her niche, and was using that to improve her business and drive sales.

This story was reprinted in another post, where additional success stories were discussed, including the story of Jessica Watson, a girl who sailed around the world solo at age 16, blogging about it and later publishing a book, as well as Rudy Ruettiger and his heroic effort to join his college athletic team.

The point behind all these stories is that people had a dream which many others stated was impossible, impractical, or foolish, yet each of them overcame numerous personal obstacles to achieve their goals. Many people talk about the reasons why they can’t start a business or achieve their dreams, but perhaps they have just not been willing to figure out a system which works for them, and will put them on the path to achieving their dreams.

I was once talking with a friend of mine about a business idea I had. He asked a simple yet hard question. “What did you do today to make it a reality?” I didn’t have a good answer – it was only an idea I’d been having for a couple of weeks. If you have a dream, what did you do today to make it a reality? What could you do tomorrow?

Rudy Ruettiger

Posted in Bootstrapping as Method | Tagged , , | Leave a comment

WordPress vs. Joomla vs. Drupal – Picking a CMS for your Business

Posted on November 12, 2010 by Charlie B
Joomla vs. Drupal vs. WordPress

Joomla vs. Drupal vs. WordPress

Last week I wrote about why every business should build their site on a CMS. This week I will help you select which CMS is the right choice for your business website.

The three I highlight here are all highly used, professional, extensible systems for site building. Each has a large community of developers, themers, users, and deployed sites, with ongoing improvements. Best of all, each is completely free. So how do they differ? The number one question I get from people is “How do I know which I should build my site on?” This article will help you answer that question.

Ease of Use vs. Technical Power

Each of these three have many strengths, but they each excel in a specific area. WordPress is incredibly easy to use and maintain, extensible, and powerful, but lacks many advanced administrative features required by high end websites. Joomla is geared towards corporate websites, or common systems such as online magazines, calendar systems, or inventory tracking. Drupal is the most technically powerful and extensible, but the hardest to learn, extend, and customize.

CMS simplicity vs. power and extensibility

CMS simplicity vs. power and extensibility

WordPress

WordpressWordPress is primarily a blogging tool, and since many sites can be set up *like* a blog, it is great for simple sites or blogs. WordPress’s greatest strength is it’s ease of use, even for non-technical users. Sites which will be static (not use a lot of server side scripting), be heavily dependent on a blog, or require basic customer interaction such as shopping carts, newsletters, calendars, etc have a great choice in WordPress. Where it is lacking is the fully dynamic functionality some advanced sites require. If each page on a site may react differently to users, or the site will have social networking features, WordPress is probably not the best choice. It has the highest market share of any CMS, with a greater number of free themes and add on modules than the other two CMS’s, as well as a large market of premium themes and bolt ons.

WordPress has a huge community built up around it, so finding developers or solving issues you are facing is usually easy when asking the community. It pulls ahead of both Joomla and Drupal for ease of use. Installing modules, upgrading the system, or taking a back up are all one click activities.

Pros:

  • Best tool for blogging
  • Easy to use for non-technical site owners
  • Setup, install, and maintenance are quick and painless
  • One click upgrades and site changes
  • largest community of theme and module developers of any CMS

Cons:

  • Extending standard functionality requires custom modules
  • Difficult to add lots of dynamic content to pages
  • Social features outside of blogging are limited

What WordPress excels at:

  • Blogs
  • Simple sites which are mainly static content (text and images) such as small brick and mortar businesses, restaurants, or personal pages.

Joomla

Joomla falls between WordPress and Drupal for both ease of use and extensibility. It uses a standard model-view-controller framework, which is very powerful for building sites using standard Joomla functionality. Joomla is more functional than a simple wordpress install, focusing on systems such as inventory trackers, or multiple contributor online magazines.

In recent years they have greatly simplified the install and upgrade processes, but this will still take some technical know how. Joomla has a large community of professional themers and extension developers, however many of these are sold for extra cost. This is perhaps the geatest downside of Joomla, as both Drupal and WordPress foster completely open source add ons to develop functionality needed by a subset of customers. Add on’s which you will find freely available and open source in Drupal and WordPress are often sold at premium prices for Joomla.

Pros

  • Nearly as easy to setup and use as WordPress
  • Includes caching by default to improve site performance
  • Flexible control panel
  • More extensible than WordPress for developers

Cons

  • Joomla falls in the middle, so except for some specialized applications, it is not the “best” system on either front.
  • Not XHTML compliant
  • No built in SEO – URLs are not search engine friendly
  • Many of the best modules cost money

What Joomla excels at

  • Sites that need more power than WordPress provides, but don’t want to learn a complex system
  • Sites that are willing to pay for premium modules and support

Drupal

drupalDrupal has more complexity in terms of setup and administration than either Joomla or WordPress, but offers easy ways to setup key functionality, such as defining dynamic pages inside the CMS which will execute custom PHP scripts. Additionally, Drupal provides a powerful API which covers many common web problems, decreasing development time considerably. I found Drupal to be great from the perspective of a developer, but I would be hesitant to build a client site in Drupal unless they had dedicated administrators who could learn the system. Drupal includes social networking functionality out of the box, allowing users to create their own content, setup a profile, and interact with other users.

The drupal community and site has many resources to help when issues are hit, but the overall administration pages and menus are incredibly numerous, not intuitive, and complex. This is the biggest drawback of using Drupal: the complexity. For instance, by default, all content is entered as HTML only, and additional modules must be installed to get What You See is What You Get editors, which come standard in WordPress and Joomla. Additionally, some functionality you might expect requires multiple interacting modules, and learning to setup and administer them. To help with this, Drupal has many out of the box reports and automated checks to help maintain the site.

Pros:

  • Great for developers
  • powerful PHP functionality for in-system customization (no need to develop modules)
  • The best system for integrating social networking with business processes
  • Powerful API for custom development

Cons

  • Challenging for non-technical users to setup and maintain
  • Standard interaction is more clunky than other systems (significant time went into theming my site)
  • The smallest number of free themes available
  • Many modules will need to be installed to get a functional site

What Drupal excels at

  • Creating complex websites on top of a CMS
  • Developers building sites
  • Social networks

Conclusion

There are many advocates for each of these systems, but it really comes down to web site requirements. If you don’t need the extra functionality of the more complex CMS systems, then it is wise to select a simpler system which will fit your needs rather then a more complex one. Hopefully I have helped lay out some of the most common factors in deciding which CMS you should consider for your site.

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7 Reasons to Use an Open Source CMS For Your Website

Posted on November 5, 2010 by Charlie B

In the past few years, I have built several websites. The first site I built, I programmed from the ground up, using 100% custom code. I created a nifty custom login function, with all sorts of easy to use login features like ajax username verification, instant password resets, and a painless sign up process. I programmed a Digg-like article rating system, community features for friending other users, and numerous other things. Most of these required a fair amount of effort, testing, bug fixing, and securing. Even then, there was more to do. As a result, some useful nice to have features were cut before go-live.

The next site I built for a client, I built on WordPress. I had a live site demo up and running with custom images, and 90% of the requirements filled in less than 24 hours. The site wasn’t as complicated as the first site I described, but I got instant feedback from the client about what they were looking for, with no custom programing at all. But getting a proof of concept out quickly isn’t the only reason a CMS is almost always the right choice for your website. Here are seven of the most compelling reasons to choose a CMS over a build from the ground up approach.

1) Leverage the power of community. Chances are, the things you want to put on your website are the same things someone else has wanted on their website. If enough people want a feature, then generally something very close can be found in the various CMS plugins or standard functionality.

2) Reduce time to market and reduce development complexity. If you are building for a customer, you can get a demo out the door quickly, and incorporate feedback instantly. If you are working on a site for yourself, you can skip implementing the common functionality, and focus on what differentiates your site, or site content.

3) Eliminate the need for human capital. Templates and modules can be downloaded free of charge, or for minimal fees. This means you can go live with a site using a template design with standard, modularized components, and get instance feedback from users and customers. Redesign after you have site success, not before, and incorporate A/B testing to maximize design value.

4) Outsource site support – for free. If you build it, you own it. The next time you find a bug, you’re on the hook to correct it. If you want a new feature, you have to build and test it. If you use a CMS, you can submit enhancement requests or support requests, and often get a patch or bug fix from someone else, all free of charge. Better yet, everyone else in the community is doing the same thing, so you leverage years of other people’s production testing. In the worst case, you can always write the patch yourself, which is no worse than if you wrote the original code in the first place.

5) Create a more agile site experience. Business changes rapidly. You won’t always have time to modify the website to meet market and customer demands when you need to develop and test each change yourself. When using a CMS, new functionality is often just a module install away, pre-tested and developed. You can turn a month long development-test cycle into a week (or day) long install-test cycle.

6) Increase link building options. Many CMS sites and modules offer various ways to market your site and gain backlinks. Whether a particular module writer keeps a list of featured sites, or CMS showcases, there are always opportunities to use your involvement in the community to increase site traffic. They may not always be potential customers, but they will almost certainly help you in other ways such as backlinks or reputation.

7) Improved Security. More than 90% of websites have serious security vulnerabilities. Almost all of these result from custom coded functions and interfaces. While using a CMS does not eliminate the risk of security breaches, you can decrease that risk knowing that the code is often reviewed by more than just you, and security patches are frequent. A quick look at WordPress versions over the past year show numerous security enhancements.

I have personally used a CMS for every site build in the past couple of years and will continue to do so into the future. Next week, I will do a comparison of the three major CMS’s – WordPress, Joomla, and Drupal, and discuss why you might select one over the others for your specific project.

Posted in Technology | Tagged , , , | 1 Comment

5 ways to keep Motivated While Starting a Business

Posted on October 29, 2010 by Charlie B

Sometimes I find it hard to stay laser focused on executing my business ideas and plans as much as I hope to. The last week has been particularly difficult for me to stay focused. I have barely accomplished any work. The design and coding state of my site are at about where they were last week, and I have been feeling less motivated to push through the present challenges than I usually am. I think everyone loses motivation and drive from time to time, but it is particularly painful when trying to start a business and meet self-imposed deadlines. I am no stranger to these feelings, and I have a standard method of dealing with it which generally works pretty well, so I thought I might share it in the hopes that someone in a similar state would find it useful.

Work through the feeling

Sometimes, when the doldrums set in, I find the best method is to ignore it. Grab a cup of coffee, and hammer out whatever task was demotivating me, or make some progress on the next milestone. Within an hour or a day the feeling vanishes and I stay on track. I fear this may be a warning sign that I am on the way to burn out, but still, I tend to push through any negative feelings most of the time. This week, unfortunately, I just become more frustrated (and a bit hard to deal with, as my girlfriend will tell you!)

Time off for strategic planning

Sometimes I get demotivated because I am spending too much time in the weeds of the business or product. I am so focused on the minute tasks that make up the whole I lose sight of the long term goals and the reasons for working on them. Stepping away from the keyboard and writing out key strategic goals, timelines, and personal goals help bring my head above water, and can bring enjoyment to even the unpleasant tasks I need to perform.

Whenever I do this kind of planning, I make sure to include personal goals as well, such as an exercise routine, saving for a specific purchase I have wanted for a while, or spending time with friends. After taking a holistic approach to tasks, working longer hours becomes more enjoyable again.

Third attempt: Shift Focus

If I have done some planning, or I find even planning demotivating, then I realize I need to shift my focus. Perhaps I have spent too much time tweaking CSS, or I played a few too many hours of a video game. Whatever it is, I shift my focus in a completely new direction, away from the task at hand, or even related tasks. This is similar to the idea behind planning, but may not even involve a work direction. I might shift focus to healthier eating habits and finding new vegetarian meals to cook, or to a game that had been sitting on my shelf, taking a mountain biking day trip, or to read a good book I had been putting off.

Occasionally working on a related piece of work can achieve the same result – for instance, if I shift away from coding to writing for instance, or from writing to marketing.

Find original sources of inspiration

I can’t do everything alone, and motivation is no different. I find doing something which inspires me helps break me out of the feelings which come with burn out. For me, this is spending time with my girlfriend, or reading blogs or books about those who have gone before me to found successful small businesses or micro ISV’s.  Whatever provided inspiration and motivation originally may do so again, or sometimes similar and related things will do it. In any case, see the people that inspire you, do the activities which motivate you, and think about events which make your mind spin with anticipation.

Take a vacation!

When I am really feeling unmotivated and approaching burnout, the only remedy is rest. When I was in high school, I watched what is still one of my favorite movies, Pi , about a brilliant mathematician.

At one point, the main character’s mentor is telling him a story about Archimedes and how he discovered the formula for volume. The King of Syracuse had commissioned a statue, which would be filled with gold. The gold was provided to the artisan, and soon after a statue was returned with the exact weight of the gold. However, the King believed he was being cheated, and tasked Archimedes to find proof. Archimedes worked for days to discover a method of exact measurement, but was continually blocked. His wife, seeing him so frustrated, asked him to instead take a bath. As he was getting into the tub of water, he noticed the water level rise and some water splash out, thus offering an effective way to test for volume. Archimedes immediately jumped out of the tub and ran naked through the streets shouting ‘Eureka!’. Archimedes was thus able to devise a test to ensure the statue was made of gold (it had actually been filled with silver!).

Sometimes, the best way to increase productivity is to stop, relax, and enjoy the beauty of the world around you.

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The Future of Independent Software Development

Posted on October 22, 2010 by Charlie B

I was reading about the new Apple desktop app store earlier today and it got me thinking about longer term trends in the business of software. More and more individual developers, or small groups of developers, are making a living selling niche software online, generally as downloadable desktop software. While this method may be working well at the moment, and will probably never go away entirely (especially when the target niche is highly technical!), I think the longer term trend is towards online only software.

Consider first the disadvantages of selling desktop software:

  • Instead of a single click to try, you have to convince users to download and install before they try
  • Piracy presents a real problem to small shops, but online software can’t be (usefully and easily) pirated
  • Consolidation of desktop software to a few mega-distribution channels. This will have the Wal-Mart effect on software.

Consider the last one for a moment, the Wal-Martization of the software business. When distribution channels are consolidated, as they were in the consumer retail space by Wal-Mart, downward price pressure and up-stream supplier consolidation frequently follow. In the short term, I think many developers will see the benefits of this approach through the simplified distribution channel offered by a centralized platform app store. However, I think this trend will only accelerate the longer term trend of moving to online only software, especially among those who, like myself, don’t want to be tied too heavily to a single company such as Apple or Microsoft or Google.

Consider the benefits of offering software online for your users:

  • Available from anywhere, at any time, with the same data
  • New revenue models, including saas
  • No need to manage end user patching
  • No need to worry about OS platform (but browsers are another story…)
  • You can still offer introductory apps to the desktop market as an advertising channel (or revenue if you charge) to take advantage of the benefits of centralized application distribution channels.

Going forward, I plan to only make online software, and have dabbled in a few of the revenue models to date. As hardware and networks become more powerful, I think we will see more and more of this trend.

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SaaS and New Business Models

Posted on June 6, 2010 by Charlie B

My previous work on gaming came to a standstill several months ago. Many things happened to cause me to abandon my foray into the gaming market.

  1. Project Darkstar was shut down by Oracle. It has since re-emerged as Red Dwarf Server. I hope this project finds great success, but the risk involved was making me uncomfortable. As a one person shop, there were too many uncertainties and too frequent changes to keep up with my limited time.
  2. Observing and learning the Game market – it is very crowded. I knew this when starting, but the competition continues to improve. Games which feed the masses (think Farmville) continue to grow, and nothing I would be creating would likely change that.
  3. Timelines are too long. Making a high quality game, my project plan was extending into the multi-year when taking into account server design, client development, and graphics. Add to that integration into portals, marketing, and so on – it quickly became too much time invested for too little chance of return.

So I made a couple of games, worked on distributing them, and then came up with a new method to start anew the process of value creation. Instead of going B2C for my next project, I am planning on launching a B2B niche product with a much better price structure and target market. Development is already underway, and I’ll be posting here over time once it is nearing completion.

Key Success Metrics

In keeping with my learning in the single-founder startup market, here are my key success criteria I used to judge market opportunities. Expect to see a post on the idea generation process at some point.

  • Idea to Launch planned to 6 months of part time work or less. I want to have everything up and running as fast as possible. My current project has been through design, and is about 50% of the way through initial development, and about 2 months have passed. So far, so good.
  • Product should target a niche where competitors already exist, but fewer than 10. This is to ensure I don’t have to create the market from scratch. In this case, I will be offering a solution at a far lower cost point and with much greater ease of use compared to my competitors. I will be going down the road of cost+ and differentiation (ease of use) compared to my competitors.
  • Product should have a sales price. Previous efforts of mine focused largely on the free or freemium markets (freemium being 90/10 free/paying customers). I still like those business models, but I have found the required volume reduces potential revenues too much for niche products. It also tends to extend the break even time by a significant amount, since you must constantly add infrastructure and scale for non-paying users. In this case, I am looking at a $20-$30 price point, recurring.
  • Keyword competition should not bee too high. In my target niche, very few keywords are very highly competitive, and ample traffic flows to some very low competition keywords.
  • Market has a long tail (Many possible sub-niches) or the market has a ways to grow before becoming mature. In my case, there is not many possible niches, but the market is still in its infancy for non-enterprise customers.

Overall, you’ll be seeing more about my product in the coming months as I prepare to launch. I will also be releasing some tutorials based on my technology choices which took me some time to figure out, based on the lack of documentation for exactly what I am trying to do.

Posted in Bootstrapping as Method, Startup Challenges | Tagged , , | Leave a comment

Why Network Marketing is Evil

Posted on April 9, 2010 by Charlie B

In the past few years, growth of network marketing has moved around the globe in a variety of product categories.  Also called Multi-Layer Marketing, Pyramid Marketing, and Direct Selling, (although direct selling is a broader term which encompasses business models I will not discuss here), network marketing has touched almost everyone’s life in one form or another. There are many proponents of network marketing, although if you look carefully you will see why network marketing is not a business model but a scam based architecture disguised as a business.

What is Network Marketing?

Unlike direct sellers of the past, who would call potential customers at home or travel door to door, the primary aim of the network marketer is not to sell products, but to add additional distributors (direct sellers) into the company. This is often done using a high level sales pitch detailing how much money the speaker has made, and often includes market-speak to gloss over the risks. Words such as business opportunity, ground breaking, work from home, financial freedom, ground floor, etc. are all used to lure in a potential new mark. When a new person joins, they must pay a nominal fee or “investment” to begin their company, usually also with offers for add on products such as samples or kits. Once recruited, the marketer is then asked to try to bring in family and friends in the same way.

Selling the actual product is generally the secondary goal, and depending on the organization may be emphasized in differing amounts. Although some sales will occur, research has shown that the vast majority of people who buy the products network marketers sell are network marketers themselves.

Given the structure of a network marketing company, it is impossible for network marketing to be a viable business model for the independent marketer. In very rare cases (approximately 10 people per company), the marketer will make significant returns, although this is due to unknowingly scamming network marketers lower on the chain out of time and money.

Why Network Marketing Cannot Work as a Viable Business Model

Business models exist to generate increasing value for the largest number of people. In traditional companies, the business model will generate benefits for all stakeholders – customers are pleased with their purchase, owners and employees receive profits, and investors receive a return. It would make sense then, that a good business model would maximize value for all involved. The question is – Does Network Marketing increase value for everyone? To answer this question in a better way, I broke out the network marketing business model into groups of stakeholders with different value propositions:

  • Customers – people who buy the product, but are not network marketers themselves
  • Network marketers – For my purposes, those with 3 or fewer levels of downstream distributors
  • Top of Pyramid – Those with 4 or more downstream levels

Now, lets take a look at how each of these groups might be affected by the network marketing model:

  • Customers:
    Customers are more likely to have a personal relationship with the seller, but because margins are suggested to be 20-30% for the network marketer, they are paying a hefty premium when compared to the more typical 5-10% in traditional retail. In addition, many products (think Amway Global) are priced higher then the competition at wholesale, and have less value to the consumer.
  • Network Marketers:
    Generally, the marketers themselves must purchase a large number of samples, workshops, materials, kits, and product for their business. This often offsets any income made by a substantial amount. Further, they tend to solicit friends and families to participate in their  ‘opportunities’, which can lead in a decline of quality relationships. This is offset by the small chance that they will attain a large enough downstream that sales and residuals will offset costs.
  • Top of the Pyramid:
    Generally the top marketers in a chain. They may see large sums of money, although almost all of it comes from their downstream payments. The chances of attaining this are very small, given the high turnover of downstream sellers. In a study (related to a court filing) of the tax returns for the top 1% of Amway sellers, the average yearly income was negative $900.

Who Will Answer the Hard Questions?

I have yet to encounter a network marketer who will honestly answer the following questions. If you are currently a network marketer, then please, ask these of yourself and your bosses:

  1. Considering that other successful companies can cover global sales with only a few hundred sales staff, why are thousands of Network Marketers a better choice for this business/product?
  2. What is the actual average retail profit per sale for a marketer with no downstream?
  3. Do you keep detailed accounting logs of profit and loss related to your business? Are you profitable?
  4. What percentage of people who pay the sign up fee actually see a profit?
  5. Why are the incentives for recruiting new talent greater then incentives for direct sales?
  6. If the best salesman in the world joined your company tomorrow, but never recruited a single person into their downstream, who would benefit the most?

Why Network Marketing is Evil

Look, when it comes down to it, most network marketers have the same dreams everyone else has: to be independently wealthy, to have time freedom, and to be productive members of society. Network Marketing pitches play to all of these dreams, and are very effective at luring people in. Add to this the lack of basic business knowledge most people have, and it is a recipe for disaster. Most network marketers do not know basic accounting, and consider all income profit, without regard to money spent. So a few people get very rich while everyone else loses money. Evil.

The DSA (Direct Selling Association) includes so many network marketing companies that it is now a lobby group for them, and have worked to have network marketing exempted from anti-pyramid schemes (Yes, it is a form of pyramid scheme, which has been made legalized through excessive lobbying). Evil.

It encourages people to exploit those closets to them: friends and family. Evil.

The worst part is, most network marketers just feel they don’t work hard enough to make the big bucks, even though the deck is stacked against them.

Don’t take my word for it..

There are many people opposed to Network Marketing and the evil it represents. Please do not involve yourself with network marketing companies. If you need more convincing, read some of these sources:

“In a randomized survey of households in Utah County, Utah, where many MLMs are located, we found four MLM distributors for every one nonparticipating customer.”

What do these companies have to say in their defense? A little reading will find replies such as “They are wrong”, “Sales are strong”, “Work hard and it pays off” or my personal favorite “It is perfectly legal”.

Finally, if you listen to nothing else, please consider the non profit, pyramid scheme alert, and research whatever network marketing company you work with.

Posted in Bootstrapping as Method | 4 Comments

Internet Start Up Mistakes and How to Avoid Them

Posted on December 13, 2009 by Charlie B

I launched my first web business 2 years ago, and just like that the venture flopped. Resurrecting the whole thing was pointless, and I spent a fair amount of time reflecting on what went wrong, what went right, and why it was doomed to failure from the beginning. Since that time, I have met many people in the same boat, or who were heading in that direction. To help prevent others from facing the same situation, I compiled a list of the main mistakes I made and see others making, and some tips on how to avoid them.

1) Not seriously writing a business plan

Many first time entrepreneurs and even some long-term entrepreneurs make this mistake. Everything you read online will suggest writing a business plan, but many people take this step for granted. Perhaps it is hubris that they have skills others do not, and thus are bound for success with their great idea. The problem is that the idea may not be so great, or the execution of the idea may fail. The business plan forces you to consider this carefully and honestly, to assess if it will be a successful venture, and what your chances of success are.

This is an easily avoidable mistake to make. Don’t just commit to writing a business plan, but commit to writing a business plan which is honest, as harsh as it needs to be, and identifies as many risks as possible. The most critical section for new web startups is going to be the financial section and the marketing section. For finance, ask yourself very carefully about the business model, and realize that the vast majority of web businesses do not make money, even for very large sites. Is your model  a good business model? How many users will you need to turn a reasonable profit? What are your costs per user and revenue per user likely to be? How many other businesses have turned a profit using this model, and how long did it take them? Did those businesses have success factors you lack? There are many such questions you should carefully analyze and write down a formal response to, even if no one will see it but the internal team.

Secondly, marketing. The question I like to ask is “is this a <major blog in your niche> worthy story?” Would they write an entire story dedicated to your product, or not? If the answer is no, you may want to seriously consider if your product has a good potential of success. The second piece of the marketing section  is market research, and really understanding the ins and outs of your competition. On the web, every other site is a competitor, not only in your own niche. If someone would rather be on facebook then your page, they will be. And finally, a good knowledge of other similar sites is critical. What are their competitive advantages? Why will you be able to siphon off their users to your own site? Is your site unique enough or superior enough to cause people to change their habits? To avoid failure, be realistic, even if the answers are harsh.

2) The Me Too Syndrome

I constantly talk to web entrepreneurs who fall into this trap. They see a major success (Some bloggers, twitter, and facebook come to mind) and then say ‘if them, why not me?’ They set out to create an also-ran product with nearly all the same features. The problem is, even if you build something which is fundamentally better then the competition, you still have to make users understand that and accept it. This works sometimes, but is the rare exception and not the rule. Generally, if you are entering a competitive space with a successful competitor, go find a new business.

3) The ‘If you build it they will come’ Fallacy

Some people have the assumption that building something means people want to use it, so they will. I actually made this same assumption when I started my first web business a few years back – thinking that there was search volume for my product, it was well designed, and so people would naturally start to use it. In reality, a business has to build out a customer base through word of mouth, advertising, brand building, and public relations. You can’t sit around for Googlers to find you. They may, but they also may not.

To avoid this, always assume that no user will find your site unless you personally direct them to it. This will help you when considering the proper marketing strategy. Building up the business case and the marketing plan in your business plan will help here. Essentially, you will need to help users to find you. Having a great product only keeps users, it doesn’t generate them.

4) The design trap

I like good design. I am not so good at creating it. My strength lies in the more technical and business oriented areas of startups, not in overall product design or graphical design. Although this is one of my weaknesses, I realize that design is a very important piece of product development. The trap is when the design becomes the product, or when the design is never ending. In the first case, a really cool designed product has forgotten about the utility of the product for the consumer. Who wants a really nice looking lump? In the second, a form of scope creep, continuous refinements in the design space can leave a product less polished, or delay delivery far too long leading to high cost.

I see a lot of web startups who tweak and tweak without ever finishing. I would recommend setting the design early on, and then going through several rounds of refinement, but leave a limit up front, and only exceed it in extreme circumstances. Once you are successful, you can always complete a redesign.

5) Product worthiness

Is your product really something other people want a lot of? Really? Is it iPod good? If you can’t honestly answer yes to this question, then what are you really doing? Perhaps just starting a business without a good product. This, along with the also ran products, is one of the main reasons I have seen many new startups fail.

A friend of mine nailed it one day when we were talking about mobile apps. He said he sees a lot of applications on the iPhone which are ok, but not great. The truly great ones come about when an existing user searches for an app she really wants, but can’t find it, so designs her own, and designs it well. This leads naturally into…

6) Filling a gap

As a corollary from the previous section, does your product fill a gap in your customers needs? If it does not, then why would a customer pay for your product? Even if your product is free, if a customer wouldn’t be willing to pay for it, you should evaluate the overall utility the business you are starting really has. Making sure your product fills a customer need is a basic part of product design, and should be considered before any significant capital has been spent, whether in time or money.

Also consider the life space that your business will occupy and how that will affect price points, even for free services. Utility applications and web sites generally have a higher price point, because they can actually improve your users life. Entertainment or social applications are more take or leave, since they are unlikely to materially improve your users life.

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